Chinese EVs Plan to Wreck Ford and GM

A headline in The Wall Street Journal says it all: “Chinese EVs Blow Past Tesla and Tariffs En Route to Global Reign.” Chinese automakers are methodically working their way into Mexico and Europe. In fact, they already have over 7% of Europe’s market.

Chinese electric vehicle companies have the United States surrounded. The moat between their current status and a successful move into the U.S. is tariff levels that make doing business in America less than economical.

What are the chances that Chinese EVs will break into other large markets? Klaus Zyciora, a former Volkswagen designer who is head of design at state-owned automaker Changan, told the Wall Street Journal, “You need to go global. Toyota did it. Ford did it. GM did it.”

It is worth remembering that Toyota Motor Corp. (NYSE: TM | TM Price Prediction) first sold cars in the U.S. in 1958. Today, it is the second-largest manufacturer in America, based on unit sales. It faced high tariffs early on. The world moves much faster now. A Chinese EV expansion into the U.S. could come very quickly, if tariffs are dropped.

How hard will the Chinese companies fight to enter the U.S.? It is the second-largest car market in the world, after China.

The current Chinese EV battle in the U.S. is between letting American consumers have access to inexpensive, well-built EVs, or, on the other hand, the protection of Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM). Ford CEO Jim Farley has already expressed a staggering fear about the quality and price of China’s EVs. Ford will not be able to match Chinese prices and quality soon, perhaps not ever.

Tariffs are a funny thing, particularly during the Trump administration. They are on, until they are off. A wide-ranging trade deal with China could affect the car industry, much as it has the artificial intelligence chip industry. Ask Nvidia. First, there are tariffs, then there are not. Then there are tariffs again. The Trump administration sometimes sees companies and industries as pawns in a huge chess game. Moreover, the White House has hinted that the way into the U.S. is to put factories on U.S. soil. That means employing American manufacturing workers.

Chinese EVs are on the way. It is just a question of when they arrive.

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